D&O liability in Asia is becoming a major concern as the region’s private capital landscape matures and outwards investment beyond these shores continue. From financial misstatements to regulatory scrutiny, high-profile governance failures are raising the stakes for directors and officers (D&O) across the region.
D&O lawsuits arise when leaders are accused of wrongdoing in their fiduciary duties — whether from fraud, breach of duty, negligence, or misrepresentation. These risks extend not only to executives within portfolio companies, but also to fund managers who hold board seats and shape governance. The following case studies highlight where things have gone wrong — and how D&O insurance can act as a critical safety net.
Case Study 1: When Investors Get Sued – Temasek, SoftBank and the FTX Fallout
What Happened: In 2023, Temasek, SoftBank, and other major VC firms were named in a U.S. class-action lawsuit for allegedly “aiding and abetting” fraud at crypto exchange FTX. Despite extensive due diligence claims, investors alleged the VCs failed to catch red flags and helped validate the now-defunct platform.
D&O Risk: Investor-side liability. Fund managers and investment committee members faced accusations of fiduciary failure and public misrepresentation. Even though they weren’t directly operating FTX, their reputations and legal exposure were on the line.
Consequences: Temasek wrote off its entire $275M investment and cut internal executive pay. Legal defense costs, reputational damage, and tighter scrutiny from regulators and LPs followed.
Mitigation: Tailored D&O insurance can cover legal defense and settlements (excluding proven fraud). Global coverage with U.S. jurisdiction protection is key. Stronger due diligence processes and ongoing monitoring could have further reduced risk.
This case illustrates a clear instance of D&O liability for Asian based private equity and venture capital, especially when investors play an active governance role.
Case Study 2: Board Oversight Failure – The Collapse of Zilingo
What Happened: Zilingo, a Singapore-based fashion startup once valued at $1B, collapsed in 2023 after CEO Ankiti Bose was terminated over financial misconduct. A forensic audit uncovered US$9M in dubious consulting fees, unapproved salary hikes, and mismatched revenue reporting.
D&O Risk: The CEO faced termination and potential legal action. Investor-appointed board members risked reputational damage and potential litigation from creditors and minority shareholders who lost out during liquidation.
Consequences: Over $300M in investor capital was wiped out. Zilingo entered liquidation. Investors like Temasek and Sequoia publicly distanced themselves to preserve credibility.
Mitigation: Better governance could have flagged issues earlier. A robust D&O policy would cover innocent directors for defense costs in harassment or negligence claims. Coverage for insolvency-related lawsuits is especially relevant in wind-down scenarios.
Zilingo’s collapse shows how unchecked executive actions can lead to major D&O liability for Asian based private equity and venture capital, especially in fast-scaling startups.
Actionable Risk Management for PE/VC in Asia.
To protect against D&O liability private equity and venture capital, fund managers must embed governance, monitor continuously, and secure tailored coverage.
- Embed Governance: Ensure portfolio companies adopt basic internal controls, audits, and board-level accountability.
- Due Diligence Beyond the Term Sheet: Continue oversight well after investing, with metric verification and periodic audits.
- Tailor Your D&O Insurance: Make sure policies include:
- Outside Directorship Liability (for board seats in portfolio companies)
- Global and regulatory investigation coverage
- Severability clauses and coverage for legal costs up to final adjudication
- Crisis Readiness: Have a response plan for internal investigations, PR management, and insurer notifications.
How Continuum Can Help
At Continuum, we specialize in providing tailored D&O and professional risk coverage for private equity and venture capital firms operating in Asia. Our advisory-driven approach ensures:
- Policies reflect multi-fund and cross-border structures
- Investor-side and portfolio-level risks are aligned
- Rapid claims response and legal support when it matters most
We help you protect not just your capital, but your leadership. Contact us today to structure the right protection for your investment team and portfolio.
